Enterprise liquidator in multi-million-pound UK claims battle

If the saga surrounding the failed Gibraltar insurer Enterprise was not already intriguing enough, the liquidator Freddie White’s first progress report on the insurer’s liquidation has taken it up a gear.

The Enterprise liquidator is now embroiled in a multi-million pound UK claims battle.

The report, published in August, shows that White is embroiled in a battle with the Manchester-based firms that were handling Enterprise’s UK motor claims after he fired both, citing his concerns about their conduct.

The fight includes a tug of war over claims files and a wrangle over £9m of outstanding fees, which White contends could inflate the already huge bill the UK Financial Services Compensation Scheme (FSCS) faces for Enterprise’s collapse.

White states that he has complained to the Solicitors Regulation Authority (SRA) about the situation.

Claims management company Claims Consulting Solutions Limited (CCSL) was handling Enterprise’s UK motor claims, while law firm Ozon Solicitors was dealing with the insurer’s litigated UK motor claims.

The publication of White’s report has fanned the flames. Ozon managing director Michael Ozon says White’s report “is highly selective, fails to explain key matters and is misleading in some respects” and called White’s complaint to the SRA “unfounded”.

CCSL managing director Mohammed Hassan Jiva goes further, calling the White’s comments in the report, “misleading and defamatory” and saying they had been made “to distract from the professional embarrassment and losses the liquidator has caused upon the estate by his wrongful termination of CCSL.”

He adds: “We will be instructing solicitors to take immediate steps against the liquidator in correcting and retracting his self-serving statement.”

Jiva said he was not aware of any SRA complaint against him and had not been contacted by the SRA.

Signs of trouble

Evidence that all was not well with Enterprise’s UK claims arrangements emerged in January this year, when White cancelled CCSL’s contract suddenly on 11 January and shifted the claims handling to Arthur J Gallagher’s Gallagher Bassett unit.

The transition appeared rocky: a notice published on the FSCS website on 18 January said that Gallagher Bassett had taken over “with immediate effect”. But on 26 January, an automated Gallagher Bassett email seen by Insurance Times said that the company “expects to be appointed” to handle the Enterprise claims and that, pending a transfer of claims files, it did not have enough information to respond to correspondence or calls from claimants.

It added: “We will respond to your email when we can but please be aware it will take a number of weeks to do so.”

This meant Enterprise’s UK motor claims were left in limbo by the sudden decision to switch claims providers, although White insisted to Insurance Times at the time that any delays caused by the shift would be “minimal”.

He added: “I am entirely happy that the decision I have made to instruct Gallagher Bassett is in the interest of the liquidation and the policyholders alike, and that this arrangement will provide a satisfactory and appropriate basis to deal with the run-off claims to their conclusion.”

White’s progress report sheds further light on what happened. He said he met with Jiva and Michael Ozon in Gibraltar on 27 July 2016 and explained that Enterprise was almost certainly insolvent, that its motor policies would be terminated and that there would be a diminishing amount of claims work.

After this meeting, the relationship with CCSL deteriorated, according to White. He said in the report: “I formed the view that any continuing relationship with CCSL was detrimental to the conduct of the liquidation and I gave one month’s notice on 27 December 2016 to terminate that relationship.”

White said that CCSL applied for an injunction to stop the contract termination, prompting him to disclaim the CCSL contract as “onerous property” on 11 January 2017. CCSL’s application for an injunction was dismissed at a hearing on 13 January.

He added that matters between himself, Enterprise and CCSL were settled on 12 April 2017 by a consent order between the three parties.

£9m tussle

The fight with Ozon is even more bitter and is still raging. White said he terminated Ozon’s retainers on 19 October 2016, “having consulted with the reinsurers and based upon my experience with Ozons [sic] and in particular Mr Michael Ozon.”

He said that Ozon “refused to relinquish [Enterprise’s] claims files” and that he was “forced to make an application to court in England for an order compelling them to do so”.

The court order was granted and White says Ozon was ordered to pay his legal costs.

Under the court order, White said Ozon agreed to pay £588,077 from its client account into court. He said the law firm has subsequently claimed that the majority of these funds are due to it in settlement of outstanding fees.

White rejected this claim and asked for a reconciliation of funds owing both ways, and said Ozon then sought payment of £6.2m for outstanding motor claims fees.

Ozon withdrew this claim “following discussion” and came back with the requested reconciliation and a claim for outstanding fees of around £9m, White’s report states.

White said: “If admitted as valid insurance claims in the liquidation such claims could therefore be paid from the [FSCS], which would then increase the FSCS’s claim as creditor. I have instructed my legal team to study the purported reconciliation and claim with a view to responding to Ozons at the end of September 2017.”

He added: “I have been concerned by the conduct of CCSL/Mr Mohammed Jiva and Ozons/Mr Michael Ozon and the effect of such conduct on the liquidation process and I have lodged appropriate complaints with the Solicitors Regulatory Authority [sic], which remain under investigation.”

Conflicting stories

The report has sparked an angry reaction from both Ozon and Jiva.

Ozon disputes White’s version of events regarding the £588,077 his firm paid into court, arguing that it was at his firm’s insistence.

Ozon said: “Ozon held sums in client account which were paid to Ozon, inter alia, as costs for work carried out in connection with [Enterprise] related matters.

Ozon claimed the liquidator was not entitled to receive these sums and therefore insisted on paying the same into court pending outcome of the dispute.

“The suggestion that Ozon abandoned its position is a nonsense. The sums remain in court and despite his instances that he is entitled to the funds, it is the liquidator that abandoned his demand for immediate payment out of court.”

He also shares Jiva’s view that White’s own conduct has cost the Enterprise estate money. He said: “I firmly believe this liquidator has caused substantial losses to the Enterprise estate since appointment through his misconceived approach.

“Crucially, he appears to have failed to state in his report that a substantial proportion of the fees owed to Ozon were, in fact, incurred by him post his appointment yet he refuses to pay the same without any justification or cause. The issues between Ozon and the liquidator will be resolved by the court in the appropriate way.”

White says: “My report is prepared in accordance with my statutory duty, and I will continue to report to creditors as required by that duty.”

With the claims battle still raging, and the outcome of the Gibraltar Financial Services Commision’s investigation of Enterprise and its board yet to be revealed, there is more intrigue to come.